The 25-year-old German, six points clear of Ferrari's [ Images ] Fernando Alonso [ Images ] with four races remaining, lapped the Buddh International Circuit in one minute 25.842 seconds, just under two tenths of a second ahead of McLaren's [ Images ] Jenson Button [ Images ].
Vettel, winner at the Buddh circuit last year, also dominated Friday's first two practice sessions.
Alonso could only manage the seventh fastest lap, with a time almost seven tenths of a second slower than his title rival.
Vettel's team mate Mark Webber [ Images ] finished the session third with a lap less than a tenth off Button's and could help Red Bull claim their third consecutive front-row lockout later on Saturday.
Button's teammate Lewis Hamilton [ Images ] and Lotus driver Kimi Raikkonen [ Images ] rounded out the top five on a sunny but hazy day on the outskirts of India's [ Images ] capital New Delhi [ Images ].
Photograph: Adnan Abidi / Reuters